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Pénzügykutató, Századvég raise 2018 growth forecasts

Economic research firm Századvég raised its GDP growth forecast for Hungary this year to 4.1% in an update released on Wednesday, while rival researcher Pénzügykutató also revised its 2018 growth forecast upwards, from 3.7% to 3.9%. 

Századvég raised its forecast on better-than-expected industrial output and retail sales data released early in the year, reported state news agency MTI.

The forecast is still under the governmentʼs official projection for 4.3% GDP growth in 2018. 

Századvég projects investment growth of 7.2%, supported by EU-funded capital expenditures and new home construction.

Századvég sees exports climbing 5.7% and imports rising 6.0%. It puts average annual inflation at 2.6% for the year.

Meanwhile, Pénzügykutató researcher Éva Várhegyi said on Wednesday that 2018 growth is supported by a favorable external environment, accelerated absorption of EU development funding, the performance of the agricultural sector, loose budgetary and income policy, and monetary policy stimulating the economy.   

Pénzügykutató forecasts that inflation could be around 2.3% this year. It says unemployment could fall as low as 3.5%, while investments could grow by 9%. 

Incomes should rise because of a tight labor market, but the pace should be below last yearʼs 13% rise, the research firm notes.

The National Bank of Hungary (MNB) is expected to keep its base rate at 0.9% and its overnight deposit rate negative throughout the year, leaving interbank interest rates at around 0%, noted Várhegyi.

The current account surplus could drop to EUR 2.3 bln, or 1.8% of GDP, but the external financing capacity of the country could amount to EUR 5.6 bln because of EU transfers, she added.